Stocks record biggest gains of year; Dow up 218

Stocks record biggest gains of year; Dow up 218

March 13th, 2012 in News

NEW YORK (AP) - Bank stocks turbocharged a rally across the financial markets Tuesday, and all three major stock indexes posted their biggest gains of the year. The Dow Jones industrial average rose 218 points and closed at its highest level since the end of 2007.

The Nasdaq composite closed above 3,000 for the first time since December 2000, during the collapse in dot-com stocks.

The market rallied from the opening bell Tuesday after the government said February retail sales gains were the strongest since September. Americans spent more on cars, clothes and appliances.

The rally gained strength in the afternoon when the Federal Reserve said it saw signs of an improving economy and expected the unemployment rate to keep falling. The Fed also said strains in the global financial markets have eased.

Then JPMorgan Chase, the country's largest bank by assets, announced that it plans to buy back as much as $15 billion of its stock and raise its quarterly dividend to 30 cents per share from 25 cents a share.

"That's what really made the day," said Jeffrey Kleintop, chief market strategist a LPL Financial.

The announcement came just before the Fed made a surprise announcement of the results of its annual stress test for banks. JPMorgan Chase and 14 other financial institutions passed. Four, including Citigroup, failed.

The Fed had planned to release the results on Thursday afternoon. But it moved up the announcement after JPMorgan declared its dividend increase. The bank said it had the Fed's blessing to raise the dividend.

JPMorgan Chase stock gained 7 percent, and other banks followed. Citigroup and Goldman Sachs gained 6 percent. Banks were easily the best-performing stocks in the market, gaining almost 4 percent as a group.

Citigroup stock was down 4 percent in after-hours trading following the Fed announcement.

The Dow finished at 13,177.68, its highest close since Dec. 31, 2007. The close put the Dow within 1,000 points of its all-time record, 14,164.53, set less than three months earlier, Oct. 9, 2007.